Essay Writing – Cryptocurrency | Essay on Cryptocurrency

Essay on Cryptocurrency

Essay Writing – Cryptocurrency

History of Cryptocurrencies in India Learn about the types of cryptocurrencies, advantages, disadvantages and the future of cryptocurrencies.

Digitization has increased the prevalence of cryptocurrencies in India in the last few years, but cryptocurrencies are still not legally accepted in India. Cryptocurrency is still not legally accepted in many countries of the world. The finance minister in his budget speech this year has proposed to introduce a digital currency in the coming financial year.

From this statement of the Finance Minister, it is clear that cryptocurrency is not going to be recognized in India in the next few days.

Clearing all doubts on whether cryptocurrency will become a legal medium of exchange in the future, the Budget clarified that the Government of India does not consider cryptocurrency as a currency, but as a virtual digital asset. .

At present there is no clear situation in cryptocurrency and most of the population is not even aware of cryptocurrency.

So in this article we will get information about what is cryptocurrency, what are the types of cryptocurrency, history of cryptocurrency in India, benefits of cryptocurrency, loss of cryptocurrency and future of cryptocurrency.

Preface

Currency is considered as a medium of exchange for goods and services and it varies from country to country. It is called as that money which we use and which we need to fulfill our various needs. Advanced technology has given birth to a new type of currency and it has been named cryptocurrency.

It is a currency that is not physically available because it is a digital currency. Cryptocurrency was invented by an unknown scientist Satoshi Nakamoto in 2008, when it was not so popular. In the last few years, the popularity of crypto currency has increased a lot, almost every 5th smartphone user is investing in crypto currency, but still some countries have not got the legal recognition of crypto currency.

Preface

Currency is considered as a medium of exchange for goods and services and it varies from country to country. It is called as that money which we use and which we need to fulfill our various needs. Advanced technology has given birth to a new type of currency and it has been named cryptocurrency.

It is a currency that is not physically available because it is a digital currency. Cryptocurrency was invented by an unknown scientist Satoshi Nakamoto in 2008, when it was not so popular. In the last few years, the popularity of crypto currency has increased a lot, almost every 5th smartphone user is investing in crypto currency, but still some countries have not got the legal recognition of crypto currency.

What is cryptocurrency?

A cryptocurrency is also a form of currency but it is not available in physical form. Cryptocurrency is a set of binary data and is used as a medium of exchange for goods and services. In cryptocurrencies, the record of each coin is stored in a digital ledger in a cryptographically secure manner so that no changes can be made to the transaction data.

People are entitled to tokens according to the amount given for their stake in cryptocurrency. It is called a centralized currency since it is issued by a single user. Later when it is called decentralized, its options are available on the digital ledger of every connected user in the blockchain.

Bitcoin is known as the first decentralized cryptocurrency which was invented in the year 2009. After the invention of Bitcoin, various cryptocurrencies were invented.

 

How many types of cryptocurrency are there?

There are thousands of cryptocurrencies in the market today. Each cryptocurrency has a different function and specification. For example, Ethereum markets Ether as its own gas for the underlying smart contract platform. Ripple's XRP is used by banks to facilitate transfers between different geographies. Except Bitcoin, other cryptocurrencies are called altcoins. They are Litecoin, Peercoin, Namecoin, Ethereum, Cardano etc.

History of Cryptocurrencies in India

Despite uncertainty about the future of cryptocurrencies in India, investment in unregulated digital assets, particularly Bitcoin, has seen a phenomenal growth since 2020. Data from various domestic cryptocurrency exchanges show that more than 1.5-2 crore Indians have invested in cryptocurrencies. India is known for investing more often in gold and other safe assets, but the growing number of cryptocurrency adopters suggests a shift in investment paradigms in the country.

Let's see how long cryptocurrency has been available in India.

As crypto investment grew in India and exchanges including Zebpay, Pocket Bits, Coinsecure, Koinex, and Unocoin emerged, the Reserve Bank of India (RBI) warned users in 2013 about the potential security risks associated with using virtual currencies. issued a circular warning.

 In March 2018, a draft plan to ban virtual currencies was submitted to the finance ministry by the Central Board of Digital Taxes (CBDT) and about a month later, the RBI came up with a plan to ban banks, NBFCs and payment system providers from trading. Circular issued. This caused a huge shock to crypto exchanges and a 99% drop in trading volume.

On 1 November 2018, WazirX founder Nischal Shetty launched the #IndiaWantsCrypto campaign for positive regulation of crypto in India. Its impact was first seen when the campaign received a positive response from Rajiv Chandrasekhar, the sitting MP of the Rajya Sabha. During the budget session in February, where the crypto bill was announced.

The ban was a major setback and resulted in crypto exchanges filing a writ petition in the Supreme Court and the ban was eventually lifted, declaring the RBI's circular unconstitutional.

The cryptocurrency battle in India was not over yet. On January 29, 2021, the Indian government announced that it would introduce a bill to create its own digital currency and subsequently ban private cryptocurrencies altogether.

In November 2021, the Standing Committee on Finance met with the Blockchain and Crypto Assets Council (BACC) and other cryptocurrency representatives and concluded that cryptocurrencies should not be banned but should be regulated.

Recently, while presenting the Union Budget 2020, the government has proposed a 30 percent tax on virtual assets like crypto.

Profit from cryptocurrency

Cryptocurrencies have the following benefits.

Transparency

In cryptocurrency trading, every transaction is recorded on the blockchain. Blockchain keeps track of everything. The data available in the blockchain is available for anyone to see at any time, and this is a huge boon for those who desire a more transparent banking or financial system.

Low operating costs

One of the major uses of cryptocurrency is to send money from one country to another. With the help of cryptocurrency, the transaction fees paid by the user are reduced to negligible or zero amount. It does this by eliminating the need for visas or other third parties to verify transactions. This eliminates the need to pay any additional transaction fees.

Protection against inflation

Inflation causes the value of many currencies to fall over time. Almost every cryptocurrency is issued with a fixed amount at launch. The source code specifies the amount of any coin; As such, only 21 million bitcoins have been issued in the world. Therefore, as demand increases, its price will increase which will keep pace with the market and prevent inflation in the long run.

confidential

Cryptocurrency is completely private, which is great for people who value their online privacy and want the privacy of much of their digital data. For more law-abiding citizens, cryptocurrencies have many benefits. There is no possibility of identity theft.

Decentralized

Cryptocurrency represents a new, decentralized paradigm for money. In this system, centralized intermediaries, such as banks and monetary institutions, do not require trust between the two parties. Cryptocurrency promises to make it easy to transfer money directly between two parties, without the need for a trusted third party such as a bank or credit card company.

Currency exchange can be done easily

Cryptocurrencies can be purchased using multiple currencies such as US dollars, European euros, British pounds, Indian rupees or Japanese yen. With the help of different cryptocurrency wallets and exchanges, one currency can be traded in cryptocurrency, in different wallets, and converted to another currency with minimal transaction fees.

Secure and private

The blockchain ledger is based on various mathematical puzzles, which are difficult to decode. This makes a cryptocurrency more secure than normal electronic transactions. Cryptocurrencies, for better security and privacy, use pseudonyms that are unrelated to any user, account or stored data that can be linked to a profile.

Unlimited transactions

With the help of crypto wallet you can pay anyone, any amount and anywhere, there is no restriction on the sending limit. Transactions cannot be blocked or monitored, so you can transfer worldwide where another user has a cryptocurrency wallet.

Losses from cryptocurrency

Cryptocurrencies can cause the following losses.

unsteady

Cryptocurrencies are prone to volatility. Cryptocurrency is a digital asset, usually not backed by physical goods or currency. This means that their value depends entirely on faith. The price of cryptocurrency is determined by supply and demand. In the absence of regulatory oversight, market manipulation can occur, leading to volatility. Due to this, institutional investment in the market is discouraged.

Thus, investing in cryptocurrency is based on luck.

Illegal

Cryptocurrency transactions are confidential, so it is difficult for the government to track any user by their wallet address or monitor their data. In such a case, cryptocurrency can be used for illegal activities. Bitcoin has been used as a means of exchanging money in many illegal transactions in the past, such as buying drugs on the dark web.

Cryptocurrencies are also used by some people to hide their sources and to obtain money illegally.

Data loss can lead to financial loss

If a user loses the private key of his crypto wallet, he will never get it back. The crypto wallet will be closed and the winning coins inside it will not be recovered. This will cause financial loss to the user.

No refund or cancellation policy

If there is a dispute between the parties concerned, or if someone accidentally sends money to the wrong wallet, then the coins cannot be received by the sender.

It can be used by many people to cheat others out of their money. Since there are no refunds, a transaction can easily be made for someone whose products or services they never received.

Exchange is not completely secure

Cryptocurrencies are very secure but their exchanges are not completely secure. Most exchanges store users' wallet data to properly manage user IDs. This data can be stolen by hackers, giving them access to many accounts. After getting access, these hackers can easily transfer funds from that account.

In the past years, some exchanges like Bitfinex or Mount Gox have been hacked and thousands and millions of US dollars worth of bitcoins have been stolen.

The future of cryptocurrency

The future of cryptocurrency depends entirely on the regulatory measures and frameworks put in place by various countries around the world. Currently, there are some challenges in the operation of this currency in different countries of the world. The most important issue is security and regulation and overcoming the challenges can help this form of currency flourish in the future. Many people are afraid to invest in currencies that have no central authority to control them. People who invest in it are mainly for the purpose of making money. They don't like this technology for doing transactions and other tasks.

Blocks of records are linked together in blockchain technology. Such technology can be developed in banking and commercial sectors to know the details of every step of the transaction. This will help in reducing any kind of illegal transactions using digital currency. Recently the finance minister of India has also said that there will not be a complete ban on cryptocurrencies in the country. Many studies and experiments will be done by government appointees to advance the adoption of this technology.

epilogue

Cryptocurrency is well designed using every modern technology like internet and developed software. The invention of cryptocurrency has been instrumental in promoting digitization. Control and management of cryptocurrency is encrypted by blockchain and is a boon for investors and traders. Countries will have to make regulations to get more clarity about the use of cryptocurrencies and blockchain.

Establishment of specific regulations and guidelines by the government will help reduce the limitations of this amazing technology.

This will enable the digital currency to become more prestigious and successful in the world in the coming future.